From crypto darling to inmate: Do Kwon found guilty of fraud, judge condemns as "despicable and shameless" and sentences him to the maximum 15 years

Once the darling of the cryptocurrency market, he is now fallen from grace. Terraform Labs co-founder Do Kwon (Kwon Do-hyung) was recently sentenced to 15 years in prison in a U.S. court. The Terra ecosystem he founded experienced a dramatic collapse in May 2022, becoming the final straw that broke the backs of countless investors.

The Sudden Collapse of the Terra Empire: The Mystery of $50 Billion Vanishing

In May 2022, a seismic event silently shook the crypto market. Under Do Kwon’s leadership, the Terra ecosystem rapidly collapsed, and within just 72 hours, approximately $50 billion in global crypto assets evaporated. Countless investors lost everything, their lifelong savings vanishing in an instant.

The core of this disaster was the de-pegging of the UST stablecoin. Originally promised to maintain a 1:1 peg with the US dollar, UST’s value plummeted the moment market confidence collapsed. What’s more infuriating is that while Do Kwon publicly urged retail investors to “hold the line,” he and project executives secretly sold off their assets behind the scenes, orchestrating a carefully planned deception.

Judge Paul Engelmeyer, during a one-hour sentencing speech, detailed numerous lies told by Do Kwon during this turmoil, condemning his actions with the words “despicable and shameless.” This was not only a legal conviction but also a moral judgment.

Courtroom Showdown: Community Outcry Becomes the Basis for the Verdict

Do Kwon was known for his aggressive attitude on social media, and his provocative and arrogant remarks are now all presented as evidence in court. Among the most memorable was his sarcastic reply to critics on Twitter: “I don’t argue with poor people. Sorry, I don’t have change for her right now.”

The judge quoted historian Robert Caro’s famous words to sharply rebuke Do Kwon: “The nature of power is to reveal human nature… you belittled a reasonable skeptic. At that moment, your true face was exposed.” This discourse echoed through the courtroom, like a thorough tearing apart of a false mask of an era.

The judge also harshly criticized letters of support for Do Kwon, comparing his supporters to “fan club members” and “cult followers, still under the influence of hallucinogens,” reflecting the judiciary’s deep understanding of the case’s nature.

Unexpected Maximum Sentence: 15 Years Far Exceeds Expectations

The 15-year sentence handed down by Judge Paul Engelmeyer of the Southern District of New York took everyone by surprise. The defense’s recommended 5 years and the prosecution’s request for 12 years were both far surpassed by the court’s decision. This ruling fully reflects the court’s assessment of the severity of the case.

During the sentencing hearing, the judge emphasized that the scale of this fraud and the number of victims were simply “staggering.” Multiple victims testified in person or via remote connection, their choking voices and tears recounting how Terra’s collapse destroyed their life plans and family stability.

The judge even questioned the prosecution’s suggested 12-year sentence, raising concerns about potential “political interference,” seemingly referencing recent U.S. President Donald Trump’s pardons of several crypto executives involved in legal issues. Both sides denied these allegations.

The Performance of Confession and Remorse: The Judge Remains Unmoved

At the sentencing hearing, Do Kwon changed his previous arrogant stance, admitting all charges and expressing remorse. He said, “The responsibility lies with me. Over the past few years, I have thought about what I should have done every moment.” When mentioning his wife and 4-year-old daughter in South Korea, Do Kwon even broke into tears, attempting to appeal to the judge’s sympathy with family ties.

However, while the judge expressed sympathy that his daughter would grow up without her father, he did not show leniency toward Do Kwon himself. Pointing to a stack of victim impact letters, the judge said, “Reading these letters is like experiencing a heartbreaking journey of human destruction caused by you.” This revealed the essence of justice—the warmth of the law comes from the tears of victims, not the remorse of the accused.

Chain Liquidation in the Crypto Market: Do Kwon Is Just the Beginning

Do Kwon’s crimes were officially confirmed in August 2025. He pleaded guilty to conspiracy to commit commodities fraud, securities fraud, wire fraud, and related wire fraud connected to the Terraform Labs scam. He knowingly participated in the fraud scheme and indeed deceived UST stablecoin buyers.

Even more shocking, under Do Kwon’s leadership, Terraform Labs became the first domino to fall in the 2022 crypto crash, triggering a series of liquidations and bankruptcies across the industry. FTX followed shortly after, declaring bankruptcy in November of the same year. Its founder, Sam Bankman-Fried (SBF), is now serving 25 years for fraud; lending platform Celsius Network’s founder, Alex Mashinsky, is also serving 12 years for fraud.

This series of events clearly shows that Do Kwon is not only a personal moral failure but also a symbol of the governance flaws in the entire crypto market. His case, to some extent, serves as a warning—how unregulated ambition can destroy markets and harm millions of investors.

Imprisonment and Extradition: Do Kwon’s Long Road to Prison

According to his plea agreement, prosecutors reduced the original nine charges with a maximum sentence of 135 years to two charges with a maximum of 25 years. Do Kwon must serve at least half of his sentence in the U.S. (about 7.5 years) before he can apply for extradition back to South Korea to face further charges.

However, the judge expressed concern about this agreement, questioning how the U.S. Department of Justice can ensure Do Kwon will not be released early after returning to South Korea. Additionally, after being detained in Montenegro for 17 months—minus 4 months served for passport fraud—the remaining time that can be credited toward his sentence is still unresolved.

U.S. Southern District of New York Prosecutor Jay Clayton issued a statement after the verdict, criticizing Do Kwon for meticulously planning scams for personal gain and engaging in deceptive public relations activities when his crimes were exposed. He emphasized: “Whether fraud occurs on the street, in securities markets, or within digital asset ecosystems, fraud is fraud. The Office of the U.S. Attorney for the Southern District of New York will relentlessly pursue justice for investors.”

From crypto star to inmate, Do Kwon’s transformation ultimately becomes an unavoidable lesson in the development of the crypto market. His 15-year sentence is not only a punishment for his personal crimes but also a profound warning to the entire market.